News Nook: Feb 1, 2025

 Indian Sector Specific News:

A) BFSI:

1) Indian Banking Sector: Strong but Facing Risks

• Indian banks are financially strong, but rising defaults in unsecured loans (like credit cards and personal loans) and global financial instability could create problems. 
• Despite RBI's efforts to slow down unsecured lending, it keeps growing. The survey also warns that a U.S. stock market decline could impact India’s economy. 
• Source: CNBCTV18

2) AI Tax on Corporate Profits

• The Economic Survey 2024-25 suggests taxing profits companies make by replacing workers with AI, as India's large workforce and low income levels make job losses a serious concern.
• Sectors like finance, healthcare, telecom, and retail are rapidly adopting AI, with banks expected to cut 200,000 jobs in the next 3-5 years.
• Source: Economic Times

3) Life Insurance Sector’s Budget 2025 Expectations

• The industry seeks higher tax deductions under Section 80C, lower GST rates, and more regulatory support to boost insurance penetration and financial inclusion.
• With India’s insurance penetration at just 3.7% (below the global average of 7%), these measures aim to achieve 'Insurance for All by 2047.'
• Source: The Financial Express

4) SEBI Plans Mutual Fund & Insurance Combo

• SEBI will soon allow investors to buy mutual funds with term life insurance to make investing easier, especially in rural areas.
• A new "Pay Right" system will help verify UPI payments to protect investors from fraud.
• Source: Economic Times

5) SEBI Plans Tech-Driven Market Reforms

• SEBI proposes digital assurance for top companies to boost financial transparency and reduce fraud.
• Plans include UPI ID verification for safer transactions and a mutual fund-life insurance combo for better financial inclusion.
• Source: Business World

B) Automobile:

1) PLI Scheme for Auto Sector Gets ₹2,819 Crore

• The government allocated ₹2,819 crore for the automobile PLI scheme in 2025-26, down from ₹3,500 crore last year, with total investments reaching ₹14,043 crore by March 2024.
• The scheme, spanning FY23-FY27 with a ₹25,938 crore budget, has 85 approved applicants and ₹67,690 crore in proposed investments.
• Source: cnbctv18

2) Budget 2025 to Boost Auto Industry Growth

• Budget 2025 includes measures for rural demand growth, MSME support, and EV incentives, such as the Dhan Dhanya Krishi Yojana, rural logistics hubs, and increased MSME benefits.
• The National Manufacturing Mission and tax exemptions will help make EVs more affordable, boosting growth across all auto segments, including two-wheelers, passenger vehicles, and commercial vehicles.
• Source: Auto Car Pro

3) Union Budget 2025: EVs Set to Become More Affordable

• The government has removed Basic Customs Duty (BCD) on key minerals like cobalt, lithium-ion battery scrap, and lead, reducing battery production costs.
• This move supports domestic manufacturing, aiming to meet the goal of 30% EV sales by 2030 and promote sustainable, locally produced electric vehicles.
• Source: Financial Express

C) Pharma:

1) Budget 2025 Healthcare Expectations: Pharma Sector Set for Growth

• The pharmaceutical sector, expected to grow from US$58 billion to US$450 billion by 2047, anticipates policies promoting local manufacturing under "Make in India" and simplification of tax and regulatory processes.
• The industry hopes for measures supporting innovation and affordable healthcare while ensuring global competitiveness.
• Source: Times of India

D) Telecommunication:

1) Budget 2025: ₹95,298 Crore Allocated to Telecom & IT Sectors

• Finance Minister Nirmala Sitharaman allocates ₹95,298 crore for IT and telecom sectors, with a notable increase in compensation for telecom service providers, rising to ₹28,400 crore from ₹13,700 crore.
• The customs duty on carrier-grade ethernet switches is reduced to align with non-carrier-grade switches, promoting better infrastructure and technological upgrades.
• Source: CNBCTV18

E) Energy:

1) Key Highlights from the 2025 Energy Sector Budget

• Significant focus on clean energy with increased investments in nuclear energy infrastructure.
• Reforms in the power sector to improve interstate transmission and energy distribution.
• Source: Economic Times

2) Economic Survey 2025: Power Infrastructure Investments and Progress

• The government has invested ₹1.85 lakh crore to improve power distribution infrastructure, boosting electricity access.
• Energy supply gaps have decreased dramatically, with the energy demand-supply gap now at just 0.1% from 4.2% in 2014.
• Source: Economic Times

F) IT:

1) Key Sectors Expected to Focus in Budget 2025

• Analysts expect major announcements for sectors like oil & gas, defense, railways, energy, and automotive in Budget 2025, focusing on green energy, defense exports, and vehicle incentives.
• Reforms in renewable energy and affordable housing, along with tax adjustments for the oil and gas sector, are anticipated, alongside plans for a major railway wagon order and EV manufacturing support.
• Source: Economic Times

G) Agriculture:

1) Agriculture Sector Growth in Budget 2025

• India's agriculture sector has shown a 3.5% growth in FY25, with horticulture, livestock, and fisheries identified as major growth drivers.
• The government is focusing on boosting productivity through initiatives like the Sub-Mission on Agricultural Extension (SMAE) to enhance farm practices and sustainability.
• Source: Business Standard

2) Makhana Board in Bihar

• Union Budget 2025-26 announces the creation of a Makhana Board to support Makhana production and marketing in Bihar.
• The board aims to assist farmers with financial and technical support, boosting rural employment and Makhana cultivation.
• Source: Down To Earth

3) India's Agriculture Sector Growth

• India’s agriculture sector has shown 5% average annual growth from FY17 to FY23, contributing significantly to national income and employment.
• Allied sectors like livestock and fisheries are key growth drivers, with livestock growing 12.99% CAGR and seafood exports up by 29.70% from FY20 to FY24.
• Source: PIB

H) Infrastructure:

1) India's Real Estate Growth

• India's real estate market is experiencing robust growth due to economic stability and improved infrastructure, with rising demand for housing and office spaces across Tier 1, Tier 2, and other cities.
• Housing demand is projected to reach 93 million units by 2036, while RERA and GST have improved transparency and project delivery in the sector.
• Source: Hindustan Times

Indian Economy and Government Initiatives:

• Ahead of Budget 2025, India's middle class is expecting tax relief, with calls for reductions in income tax slabs to boost purchasing power. There is also anticipation for concrete measures to address unemployment and support farmers.
• Budget 2025 includes sector-specific announcements, including a modified UDAN scheme for aviation, new nuclear energy projects, and a Rs 6.81 lakh crore defense allocation.
• Agriculture initiatives include a National Mission on High Yielding Seeds, a focus on cotton productivity, and enhanced loan limits for farmers. Key healthcare measures include expanding medical college seats and exempting lifesaving drugs from customs duties.

Indian Stock Market Update:

• Indian markets ended flat amid budget volatility, with Sensex up 0.01% and Nifty down 0.11%.
• Realty, FMCG, and auto sectors saw gains, while power, capital goods, and energy sectors declined.
• The PM Surya Ghar Muft Bijli Yojana saw an 80% rise in funding, targeting 30 GW of residential rooftop solar by 2027.
• The budget focuses on agriculture's "4 I's" (income, inflation, import reduction, climate resilience) to boost productivity and self-sufficiency in pulses and edible oils.

Bonus Briefs:

• Trump's policies focus on reducing domestic energy costs by increasing oil production and loosening regulations. US aims to strengthen global influence with LNG exports, though it could raise domestic gas prices.
• Reductions in federal support for renewables and EVs could weaken US competition in clean energy.

Budget 2025 Highlights:

• Income Tax: No tax on income up to ₹12 lakh under the new tax regime.
• Capex: India's capital expenditure for FY2025-26 is ₹11.21 lakh crore. 
• Income Tax Rebate: The income tax rebate under Section 87A has been increased for individuals. The rebate limit has been raised from ₹7 lakh to ₹12 lakh, and the maximum rebate from ₹25,000 to ₹60,000. This will provide relief to taxpayers with income below ₹12 lakh. However, it excludes income taxed at special rates.
• Middle-Class Tax Relief: The Union Budget 2025 is being referred to as the "dream budget" for the middle class. Taxpayers earning up to ₹12 lakh annually (excluding special income) will face no tax liability due to increased rebates and reduced slab rates. For a person earning ₹12 lakh, the benefit is ₹80,000, while those earning ₹18 lakh will receive ₹70,000 in tax relief.
• Govt’s Revenue Sources: The Indian government’s revenue sources include income and corporate taxes (39%), GST (18%), union excise duties (5%), and customs duties (4%).
• Real Estate Investment: The government has introduced Swamy Funds 2 for real estate, with ₹15,000 crore contributed by the central government, alongside additional funding from banks and financial institutions.
• Regional Connectivity: A modified version of the UDAN scheme will be launched to connect 120 new destinations and serve 4 crore passengers over the next 10 years.
• Fiscal Deficit and Borrowing: India’s fiscal deficit for FY2025-26 is projected at 4.4% of GDP (₹15.68 lakh crore), with market borrowings estimated at ₹11.53 lakh crore.
• Real Estate and Manufacturing: The government aims to support clean-tech manufacturing, focusing on solar panels, EV batteries, and other green technologies. Additionally, India has exempted customs duties on Wet Blue Leather to boost imports for domestic value addition.
• Micro Enterprises Credit Card: A customized credit card with a ₹5 lakh limit will be launched for micro-enterprises registered on the Udyam portal, with 10 lakh cards planned in the first year.
• Tourism Development: The government plans to develop the top 50 tourist sites in partnership with states, promote homestays through MUDRA loans, and provide performance-linked incentives for states. E-visa facilities will also be introduced to boost tourism.
• Job Creation and MSME Support: The government aims to create 22 lakh jobs through initiatives like the Focus Product Scheme in the footwear and leather industry. Additionally, MSME investment and turnover limits have been increased, providing them with more growth opportunities.
• Source: LiveMint